COVID-19

Pandemic positions some companies to do better than others

Andy Uhler Apr 30, 2020
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Companies that sell shelf-stable foods have benefited during the coronavirus pandemic. Chandan Khanna/AFP via Getty Images
COVID-19

Pandemic positions some companies to do better than others

Andy Uhler Apr 30, 2020
Companies that sell shelf-stable foods have benefited during the coronavirus pandemic. Chandan Khanna/AFP via Getty Images
HTML EMBED:
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Corporate performance in this economic crisis won’t be uniformly terrible. Twitter announced on Thursday it has seen a spike in daily active users. Food giant Kraft Heinz reported higher revenue in the first quarter. Comcast had a not-great earnings report but did benefit from a lot more people signing up for broadband. Turns out, there are business winners and losers in the new COVID-19 reality.

Increased demand for food staples means higher sales for companies like Kellogg’s, which Thursday reported stronger-than-expected earnings. John Stanton, professor of food marketing at Saint Joseph’s University, said people are stocking up on foods with long shelf lives, like Nutri-Grain Grapetastic breakfast bars.

“If you get panicky and you say, ‘Oh, I don’t know if I can get to the store that often. I’m going to buy more of these products,’ you’re much more likely to use them up,” Stanton said. “And when you go to the store, you buy them again.”

But, will we keep buying Pop-Tarts and Eggo waffles after the lockdowns are over? Nicholas Rossolillo, president and investment advisor at Concinnus Financial, thinks we might — at least for a while as people develop new buying habits and sales stay elevated.

“If you’re driving to the Grand Canyon, you have to go up the mountain first, and then you go back down the mountain. But you settle onto this high-elevation plateau,” Rossolillo said. “I think that’s what sales for a lot of these staples companies are going to do.”

It’s not just food companies. Amazon, Google, Microsoft and Netflix are also seeing some benefits from folks staying at home. Facebook said Wednesday its ad revenue has stabilized. And Daniel Ives, managing director and senior equity research analyst  at Wedbush Securities, notes that on Thursday, Twitter reported growth in daily active users.

“They could be a net beneficiary, even though there’s definitely headwinds in their business,” Ives said.

Twitter may have more users, but the company also disclosed that ad revenue dropped 27% from March 11 to March 31 as the pandemic worsened.

COVID-19 Economy FAQs

How many people are flying? Has traveled picked up?

Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out recently from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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